UNDERSTANDING MEDICAL BILLS

UNDERSTANDING MEDICAL BILLS

This guide will help you, as a patient, navigate the medical 

billing process from the moment you contact a healthcare 

provider about an appointment until after you receive 

your bill in the mail.

Healthcare Technology Vision 2015

That's according to a new Accenture report, Healthcare Technology Vision 2015, which lays out five key trends in the industry that show adaptation might be the best business model.

First, Accenture analysts are calling it the "platform revolution" – that is the ever-increasing ubiquity of mobile and cloud platforms that far surpass merely the ability to track in real-time a patient’s health. Rather, this is a platform that addresses interoperability, "that captures the data from disparate sources such as wearables, phones and glucometers, and pulls it all together to give a patient and caregiver a holistic and real-time view of the patient's health," they write.

[See also: Healthcare to enter 'third wave of digital'.]

The second trend, as the report emphasizes, is around the "outcome economy." In other words, "it's about delivering results." Hardware, nowadays, brings with it new intelligence. Better intelligence than ever before. And that's going to make patient data accessible with a mere click. It's going to give patients the convenience, and it’s ultimately going to lead to better outcomes, according to the report.

The third trend is around data, what's billed in the report as the "intelligent enterprise" – essentially a "data explosion" that will lead to tremendous clinical outcomes opportunities.

In fact, big data has gotten so big that some 41 percent of healthcare executives say the data volume their organization manages has increased by a whopping 50 percent just from a year ago.

Tomorrow, Accenture officials say, this trend will turn into an EMR including a "lifetime's worth of data"; it will be used regularly to predict ER visits. Consumers will be able to snap a photo of a skin rash and have a diagnosis shortly. Considering this trend, it may come as surprising that still only 28 percent of docs say they routinely use CPOE systems.

Coming it at No. 4 is the "Internet of me" trend – that is personalized medicine. And as more healthcare organizations invest in this technologies and system capabilities, they’re seeing positive results. In fact, an overwhelming 73 percent of health execs surveyed say they've seen ROI after investments in personalization technologies.

The last trend may make some feel a bit uneasy. And it's about the emergence of machines. It's the "workforce re-imagined." Think digital self-scheduling, sharing your own electronic medical record, training machines and connecting with physicians via social platforms.

According to Accenture data, 66 percent of health systems in the U.S. will have self-scheduling by the start of 2020. And nearly half of health execs strongly agree that within three years, they'll need to focus on training machines just as much as training employees. What does this mean exactly? Just think algorithms, machine learning and intelligent software.

"Patients can actually begin to care for themselves – relieve the burden of the delivery system and get a better result," says Kaveh Safavi, MD, global managing director of Accenture's healthcare business, in a video announcing the report. "That's truly workforce reimagined, because now you've made the patient part of their own care-giving team, and the technology makes it possible."

Related: 6 Things I Wish Somebody Had Told Me When I Started My Small Business -6

6. Solution production and support

If your product is hardware, you need manufacturing, quality control and inventory. In all cases, you need customer support, formal processes and training in place. As an entrepreneur, make sure you understand your direct and indirect costs, staffing requirements, margins and metrics to make sure these elements are in place.

Related: 6 Things I Wish Somebody Had Told Me When I Started My Small Business - 5

                                                                                           5. Sustainable competitive advantage

Every solution has competitors and alternatives, or it has no market. Thus, it needs an advantage to rise above the crowd, such as a patent and trademarks, unique market positioning or support from industry partners. Too many competitors or a product with minimal differentiation makes a startup risky.                                 

Related: 6 Things I Wish Somebody Had Told Me When I Started My Small Business - 4

4. A near-term customer value proposition

Customers buy solutions with value that's quantifiable to them today, meaning value which, compared to existing offerings, is half the cost or offers twice the productivity. Long-term value propositions to society, or paradigm shifts in technology, generate interest but don’t close sales in the time frame your startup needs to survive and prosper.

Related: 6 Things I Wish Somebody Had Told Me When I Started My Small Business

1. An experienced and skilled team on board

Even the best solution won’t rise above the crowd unless it is driven by an equally outstanding team. In fact, most investors will assert that the team is more important than the solution in startup success. They look for a balanced mix of people with complementary skills, experience and determination.

Things to Consideration starting a Medical Home Based Office

We offer a complete billing solution:

• Create, submit, follow-up and post reimbursement.
• Bill patients and handle patient inquiries
• Advise customers on strategies or procedures that can increase collections and compliance with government mandates.
• Manage all patient and other data in compliance with government mandates.
• Provide customized management reporting designed to improve financial performance and contract negotiation outcomes.
• Flexible statistical reporting
• Productivity tracking
• Coding reviews

Please review our performance-based services and together lets meet those ends.

Accounts Receivable Management: • Coding • Billing • Claims Processing & Follow-up • Payment Processing • Lockbox Services • Secondary/Tertiary Claims Mgt. • Internal Controls • Electronic Claims Mgt. • Paper Claims Mgt. • Daily, Weekly, & Monthly Reports • Audits • Patient Statements • Software and Network Solutions NEW PRACTICE CHECK LIST Financial Considerations     1. Prepare and present pro-forma financial package & obtain financing (Mini Business Plan). 2. Decide on business format. 3. Secure tax identification number (s). 4. Contract for legal services. 5. Contract for accounting services. 6. Secure business checking account (s). 7. Formulate fee schedule. 8. Contract with selected third party payors. Facilities & Design     1. Determine space needs. 2. Locate available space. 3. Negotiate lease. 4. Attorney review lease. 5. Secure floor plan and or space plan. 6. Arrange telephone service 7. Arrange for utilities. Professional Consideration     1. Medical Society Membership. 2. Local specialty group memberships. 3. Secure hospital privileges. 4. Secure relief coverage. 5. Secure telephone directory listings. 6. Secure County Medical Society directory listing. 7. Have business card printed. 8. Visit referring physicians. 9. Design and printing of announcements. 10. Mail announcements. 11. Secure DEA registration. Insurance     1. Secure agent(s). 2. Malpractice insurance. 3. Casualty Insurance. 4. Accounts receivable. 5. Office liability. 6. Non-owned auto. 7. Fidelity bonding for employees. 8. Property. 9. Umbrella liability. 10. Workman’s Compensation. 11. Auto. 12. Personal property 13. Health. 14. Disability. 15. Life. Medical Equipment & Supplies     1. Develop list of medical equipment. 2. Submit list for bids 3. Order equipment. 4. Check plans for equipment and special requirements. 5. Develop list of medical supplies and drugs. 6. Schedule meetings with drug reps. and secure samples. 7. Order drugs and supplies. 8. Secure clinical patient education information. 9. Oversee installation of medical equipment. Office Equipment & Supplies     1. Develop list of office equipment and furnishings. 2. Submit list for bids. 3. Order equipment and furnishings. 4. Develop list of office supplies. 5. Price compare supply vendors. 6. Order supplies. 7. Secure service contracts on major equipment. 8. Necessary printed items: a) Letterhead & envelopes b) Prescription pads c) Patient registration forms d) Patient history forms e) Patient progress sheets f) Record of surgery g) Medication record h) Lab report forms i) Patient Information Brochures j) Medical records releases 9. Order medical records system: a) Filing cabinets b) Charts c) Color Coding supplies d) Purging system e) Outguides 10. Secure insurance claim forms. 11. Secure magazine subscriptions for waiting room. Personnel     1. Determine personnel needs. 2. Recruit applicants. 3. Screen applicants. 4. Interviews. 5. Check references. 6. Conduct background checks. 7. Prepare personnel policy manual. 8. Prepare job descriptions. 9. Decide pay levels. Implementation & Installation of Systems     1. Appointment scheduling 2. Billing System/Billing Service. 3. Internal controls. a) Petty cash fund b) Change fund 4. Formulate operations policies and procedures. 5. Advertising.

The Procedure: • Coding (CPT, ASA, ICD-9, HCPCS and Modifiers) • Start/Stop Time Verification • ASA Unit Assignments • Concurrency Assignments (Direction & Supervision) • Labor Epidurals • Acute, Chronic Pain Mgt. • Contract Reviews/Negotiations • Reimbursement Audits • Encounter Sheet Development/All Specialities • Billing Paperwork Exchange Management

Links

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 Links to Workforce Info Sites

	Regional Economic Development
	US Department of Labor
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	Employment and Training Administration (ETA)
	Workforce Information Council (WIC)
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Beginning Balance Sheets

Assets Transferred In To The Business
1	Office Equipment				$	1,000.00
2	Hours Invested to start up				$	3,200.00
	3. Total ATI						$	4,200.00
Assets Needed for Start-Up
1.  Land					$	-
2.  Building					$	-
3.  Equipment					$	2,500.00
4.  Furniture & Fixtures					$	250.00
5.  Renovations/Lease Improvements					$	1,000.00
6.  Initial Inventory					$	1,000.00
7.  Working Capital / Cash					$	1,000.00
8.  Intangible Assets*					$		1,000.00
9. Business Acquisition					$	-
	9.  Total Assets for Start-Up						$	6,750.00
10.  Total Project Cost = 3 + 9							$	10,950.00
11. Personal Funds you Plan to Invest					$	500.00
Other Sources of Equity^
12	Assets Transferred In = Line 3.				$	4,200.00
13					$
14					$
15.  Total Equity Investment = 11+12+13+14							$	4,700.00
16.  Outside Financing Needed = Line 10 - Line 15							$	6,250.00
* franchise fees, patent fees, trademark fees, etc.
^ equity must be "patient capital" meaning no repayment for 12 months or longer.
Washington Small Business Development Center  www.wsbdc.org
Supplied in cooperation with the North Dakota SBTDC

Trade Name Checker

Your Search Criteria:   License Type: All Business Licenses Business Name: ClaimPay MD County: All Counties   No matches were found for your search.   Information Current as of 09/18/2015 6:39AM Pacific Time

Outsource or In House Medical Billing Facts

	In-House	Outsourced
Billing department costs	$118,000	$4,000
Software and hardware costs	$7,500	$500
Direct claim processing costs	$3,600	$122,500
Software and hardware costs	$5,500	$2,000
% of billings collected	60%	70%
Collections	$1,370,900	$1,623,000
Collections costs	$129,100	$127,000
Collections, net of costs	$1,241,800	$1,496,000

Some background on our cost assumptions follow.

Billing staff costs.

IN-HOUSE: This was calculated by adding up the median salary of two medical billing employees ($80,000), healthcare costs for two employees ($9,000), federal and state taxes for two ($12,000), and training costs to keep the employees updated on the latest industry developments ($2,000). Finally, we’ve included $15,000 in ancillary costs for statement paper, office space, office hardware and other miscellaneous costs.

OUTSOURCED: We factored in five hours of time per week required to manage tasks related to billing at approximately $15 per hour. Even the best medical billing service will require follow up from a practice about particular issues. That adds up to approximately $4,000 per year in administrative costs.

Software and hardware costs

IN-HOUSE: We’ve factored in an annual cost of approximately $7,000 for practice management software (~$200 per month, per doctor) and another $500 for computer hardware costs. This does not include the upfront cost of a software system.

OUTSOURCED: This reflects the computer and printer the practice would still need to interact with the billing service and print documents.

Direct claim processing costs.

IN-HOUSE: Clearing house fees for a provider submitting 20,000 claims per year would be approximately $300 per month ($100 per physician), or $3,600 annually.OUTSOURCED: A medical billing service usually charges a percentage of the amount collected as their fee. The industry average varies widely by specialty. We’ve used 7% for our primary care practice.

Percentage of billing amount collected

IN-HOUSE: The percentage of revenue that a practice collects varies widely by specialty as well. Our hypothetical practice collects 60% of what it actually bills. According to industry experts, this describes an in-house billing department that is average at bill collection.

OUTSOURCED: A practice can expect a 5% to 15% increase in the amount they’re able to collect by switching to a billing service. We factored in a 10% increase in the amount of money collected by a billing service as an average between the two. Many firms can help increase collection rates even more.

Our cost comparison favors outsourcing billing, mainly based on the ability of a billing service to collect a higher percentage of the billed amount. Of course, this introduces a big “if.” That is, outsourcing makes more sense if the billing service improves collections significantly (i.e. on the order of 10%).

But there are other factors – beyond costs – that a provider must consider in its decision making. Let’s examine the two approaches to compare advantages and disadvantages.

In-House Process

The in-house procedure for processing insurance claims involves a number of steps that are universal to every practice. First, employees enter information into the medical billing software program from a “superbill,” which is gathered during a patient’s visit. The superbill contains particular diagnosis and treatment codes, among other patient information, which the insurance company uses to determine if the claim is legitimate.

Via the practice’s billing software, the provider then submits the claim to a medical billing clearing house, which verifies the claim and sends it to the payer. The clearing house scrubs the claim for the errors (for a fee) before passing it on to the payer. By not submitting claims directly to a payer, the provider saves time, money and lowers rejection rates. The clearing house also has the ability to format and submit claim data en masse in the various insurance company formats.

Once the claim is rejected/accepted by the payer, notification of the claim’s status is sent to the clearinghouse, which updates the provider on the status of a claim. If a claim is rejected, the provider’s staff resubmits the claim once additional information has been gathered. The practice will be charge for each claim submission, even if it’s a correction.

EHR software – especially those EHRs with a integrated practice management system – has the potential to make in-house billing easier for a practice. EHR software, when integrated with a practice management system, will populate both system’s data fields. Diagnosis codes and other information needed for billing doesn’t need to be keyed into another system. This eliminates a second round of data entry. This tighter integration may be one factor that helps keep billing in-house.

                                                                Outsourced Process

The process for outsourcing billing is more straightforward for practice staff. Superbills and other documents are scanned and electronically sent or mailed to the medical billing service. The medical billing service takes care of the data entry and claim submission on behalf of the provider. Most billing services charge a percentage of the collected claim amount. The industry average is approximately a 7% charge for processing claims through a medical billing service.

The medical billing service takes care of much of the “dirty work” associated with the billing process. It will also follow up on rejected claims, pursues delinquent accounts, and even send invoices directly to patients. The convenience factor is a major reason that providers choose to outsource.

If a practice is using EHR software, then the process is even easier. Information from a patient’s superbill is stored in the EHR and electronically transmitted to the billing service. This eliminates the need to send paper records to the billing service. And because the EHR software eliminates an extra round of data entry, accuracy is also improved.

One possible issue here is data integration between the EHR software and the billing service. The type of data being exchanged between the provider and the billing service will need to match, or else the data will need to be converted to a different format. Depending on the billing service, data conversion may be an option.

Should You Outsource Your Billing?

Besides costs, there are other factors that would spur a provider to consider outsourcing their billing.

• Your billing process is inefficient. If you’ve been watching your collections drop while the time to collect increases, you may have issues in your billing department. Outsourcing to a third-party billing service typically decreases the number of rejected claims and decreases the time it takes to receive payment from a payer.
• You have high staff turnover. Turnover is an issue in any industry but turnover in a provider’s billing department is especially damaging. Claim processing is the economic life blood of a practice and a new addition or replacement in the billing department will inevitably lead to slowdown in the processing of claims.
• You’re not tech savvy. Keeping your billing in-house will require an investment in practice management software. Add in training for your staff and the significance of this investment becomes clearer. If you don’t want to deal with software upgrades and occasional technical issues, outsourcing is probably a good choice.
• You’re a new provider. New providers have plenty to learn and worry about aside from their billing. Outsourcing their billing right off the bat can give them much needed relief from the day-to-day stress of launching a new practice, without a trial by fire in hiring, training and managing employees.
• You have different priorities. Many doctors are not strong on the business side of running a practice. They became doctors to help patients – not worry about the administrative/clerical side of the business.  Outsourcing the billing process eliminates the hassle and frees doctors to concentrate on patients.

It’s important to note that a medical billing service isn’t a silver bullet for in-house billing issues. Billing services can vary widely in their efficiency and accuracy when processing claims. If a provider chooses a billing service that is lax and prone to errors, the headaches surrounding billing issues won’t get better – they’ll get worse.

Which Approach Should I Choose?

It’s important for a practice to factor in their individual costs and preferences when deciding whether or not to outsource their medical billing. In an apples-to-apples comparison, we found that outsourcing had the higher net income. However, cost isn’t the only issue practices should consider.  There are plenty of other factors involved in this business decision that may be as – if not more – important than costs.